January 18, 2022

Game Theory and Business

Brain Stuff, Daily Writing Blog

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I rarely play computer games. I gamify life instead.

The closest I get to playing computer games is using apps to play traditional games. I play chess and draughts mostly.

Recently though, I’ve been playing Connect Four.

Now, you might think that this is going to be a generic, “What is this guy talking about?” kind of article, but you’ll be surprised.

Here’s what you can learn from playing games like Connect Four.

Game Theory For Civilians

Game theory is a niche specialisation within computer science and mathematics.

It’s concerned with strategy and specifically the conflict caused when you have two different beings with two different outcomes that they want to occur.

It takes its name from games, which are the simplest version of this: player one wants to win, player two wants to win, they can’t both win, and so let’s see what happens?

This then extends to strategy, warfare and politics, among other things. Basically, game theory applies whenever you have two different people who want two different things.

I say that but I’m not an expert. I tried reading a book about game theory once and my brain was too small for it.

But I can play Connect 4 and that’s all that matters.

I originally got into game and strategy stuff back when I was twelve and playing Red Alert 2 with my friends and later quite competitively. I was pretty much obsessed with coming up with strategies that worked so I could win all the time without thinking too hard.

That’s followed me through life with the templates, hacks and blueprints approach I take to everything.

And that’s where you see the relevance to business stuff.

The Rules Of The Meta-Game

Even simple games occur on multiple levels.

Think about poker, which is a complex game.

At the beginning, you think that it’s a game of luck and skill. The cards get shuffled randomly and then whoever gets the best hand wins.

But then you’re introduced to the concept of bluffing. And it’s not just about the cards anymore. It’s about whether or not the player opposite you a) has better cards than you and b) whether he’s lying about having better cards than you.

But then you think of the extra levels implicit:

  • You can have good or bad cards
  • He can have good or bad cards
  • You can lie about your cards
  • He can lie about his cards

And if you think that’s as far as it goes, then you’re still a civilian at the game.

  • You can have good and/or bad cards and lie/tell the truth about this
  • He can do the same
  • You can have a bad position(bad cards) and tell the truth (so hold or bet a bare minimum to show no confidence) and yet this can come off as a bluff to your opponent
  • He can do the same

Then there’s a meta-level where the cards don’t matter: Because you could have the worst hand known to man and still win if your opponent is less confident than you are.

At that meta-game level, you’re essentially betting against a) yourself and b) possible future outcomes.

That’s expected value which we’ve covered before. You know mathematically that you have a certain chance of winning with the hand you have. But that doesn’t matter.

There are guys out there who can project confidence and win even with losing hands. And that’s a meta-game thing.

And this brings us back to Connect 4 and my smaller-brained musings.

The Rules Of The Game

Most people play to play even when they think they’re playing to win.

Let’s talk about Connect 4, which is essentially Noughts & Crosses or Tic-Tac-Toe but with four-in-a-row as a goal instead of three.

Now, most people know that Tic-Tac-Toe is a solvable game. If you go first, then if you know what you’re doing you can’t ever lose. You can be forced to draw, but there’s no way for the second player to beat you unless you make a mistake.

Connect 4 looks more complicated and is more complicated, but the same rules still apply.

If both players play perfectly, player two can only force a draw.

In Connect 4 though, there are a lot of possible variations of the board, and so it’s not possible to memorise the winning pattern as it is in Tic-Tac-Toe.

But you can solve the game.

If you’re Player One, then you need to play the middle of the board to start with and then not mess up.

If you’re Player Two, then you need to force Player One to mess up and failing that, you must play for a draw (and then replay with you starting first.)

What Does This Have To Do With Anything

You might be asking what this has to do with anything.

Life is a series of games that are basically rigged.

You can go on Twitter and see a million alpha males posting pictures of wolves and stuff, talking about how “business is war” and badly quoting Robert Greene’s nerd manifestos…

But in reality, business isn’t war, tweeting wolf pictures isn’t alpha and Robert Greene’s books are basically “bad social skills for middle managers.”

Business success is a set of games.

And as you can see from Connect 4 – the only way to ensure you win is by learning the rules and playing the meta-game.

At the meta-game level, you can basically do whatever you want because the rules are internalised and the game is you vs. yourself.

One level of your self is the level that thinks, “can we get away with this when the deck might be stacked against us?” and the other is the level that is willing to call the card win or lose.

If you know the rules, you can avoid losing. If you only enter into situations where you can’t lose, you’ll always win.

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